Business and economic news for the Santa Barbara region

CLU Economists Predict ‘Slow, Painful Recovery’

California Lutheran University Center for Economic Research and Forecasting first-quarter economic forecast on April 14 said the region has entered “deep recession” and predicts “slow and painful recovery.”

It anticipates 20 percent decline in gross domestic product, or GDP.

The forecast also said, “It is not too early to declare that we are experiencing a historic and life-changing event.”

The forecast said the recession comes as a result of COVID-19 and “extraordinary policy responses intended to slow the disease.”

California Lutheran University Center for Economic Research and Forecasting has developed a range of scenarios, including a baseline forecast and “an optimistic scenario.” It says the primary driver of the scenarios is the duration of social distancing and shelter-in-place orders.

The forecast says, “Implied quarter-on-quarter annualized growth rate is staggering: negative 50 percent in Q2. Plainly, there is no economic contraction in the post-World War II era that compares to the current crisis.”

It goes on to say, “We anticipate average monthly losses of none million jobs during the second quarter of 2020. Job losses under this scenario dwarf anything experienced since the Great Depression.”

The forecast economists are among the 45 percent in a recent Wall Street Journal survey who are predicting a “U-shaped” recovery, with a prolonged trough and a slow and painful economic recovery.